Seatrade Maritime: Trump era puts market forecasting into ‘coin flip’ territory

Such is the uncertainty created by President Donald Trump’s economic policy that Drewry began today’s webinar by saying that almost all its forecasting will be wrong.

Drewry analyst Simon Heaney said he “feels for carrier executives” trying to plan as the US has “taken a chainsaw” to rules of governance and international trade and that makes the outlook for container shipping even more uncertain than at the beginning of the pandemic.

“The difference is that the world quickly got to grips with the risks that Covid presented and once it was fully understood we were able to plot a recovery in a remarkably short space of time. It’s not the case these days, none of Trump’s policy decisions or executive orders relating to trade have any quality of permanence,” said Heaney.

Business contracts and investors are unwilling to participate in such an uncertain climate, he added, concluding that businesses are left wondering under what conditions the Trump administration would be persuaded to change course.

“Meaning that as of today any predictions we make for the container shipping market, or any market, have an extremely short shelf life, we’re in coin flip territory as we await what happens after the 90-day pause in reciprocal tariffs,” concluded Heaney.

A ruling by the Supreme Court on the legality of reciprocal tariffs, or the use of the International Emergency Economic Act, the legislation that Donald Trump used to justify executive orders on tariffs, is expected as early as this week.

Drewry, however, believes that other regulations, such as Section 122 of the Trade Act, allows the president to impose temporary tariffs, up to 150 days, to meet balance of payments deficits. 

Or there is Section 232 of the Trade Expansion Act, which authorises the president to impose tariffs or other trade restrictions on imports if the Department of Commerce finds they threaten national security.

Heaney argues that should the Supreme Court rule against the administration there could be a brief period where import duties are lifted, leading to a major surge in demand for container shipping space, before the tariffs are reintroduced.

This uncertainty has led the International Monetary Fund to downgrade its US GDP outlook for 2026 to 1.8%, down 2.7%, and world outlook has shrunk from 3.3% to 2.8%, with “the lurch toward protectionism” will reduce trade GDP and ultimately the level of demand for container shipping.

These revisions of the trading outlook have meant that Drewry is also revising its forecasts downwards, with 2025 container moves to have decreased 1%, including loaded, empty and transhipment moves, a similar contraction that was seen in 2020. 

This is only the third year, since Drewry records started in 1979 that there has been a contraction in container handling. Drewry forecasts that container handling in North America has declined 5.5% in 2025 and will contract a further 4.6% this year.

This contraction “massively increases the risk to carriers, damage limitation is the name of the game,” said Heaney.

That will require carriers to invest more in emerging trade routes and reduce operational costs substantially. There will be more blank sailings for ships calling at US ports, “But this will only be a stop-gap solution, and longer-term carriers will need to take a more holistic look at downsizing their fleets.”

Drewry argues that there will necessarily be a rapid ramping up of idling and scrapping of vessels and delaying of newbuilding deliveries and a “Worst case scenario” could see cancellations of recent orders.

With the global fleet having increased by 8 million teu over the previous four years there is a need to see an increase in scrapping, and as of March 2025 there were 3.5 million teu that were over 20 years old, a “sizeable chunk of the market that could be culled,” said Heaney.

According to Heaney there is a need for demolition to hit 450,000 teu this year ramping up to 700,000 teu in subsequent years, particularly if a full-scale return of ships to the Suez Canal occurs.

A rapid return to Suez would see a rapid decline in rates as but a slower return appears to be favoured which should see a shallower decline in both spot and contract rates.

Hong Kong consultant Linerlytica in its weekly rate review reported that rates from Asia are already in decline ahead of the Chinese New Year lull.

“The lack of capacity discipline continues to pull down freight rates with the SCFI shedding 4.4% last week with carriers rolling back earlier rate increases,” said Linerlytica.

Easing congestion on the Asia to Europe trade along with extra capacity from CMA CGM ships returning to Suez have added capacity over the coming four weeks, said the consultant, driving spot rates lower.

On the eastbound Pacific carriers have failed to achieve mid-January rate increases, and consequently the SCFI is down 1.1% to the West Coast. Although East Coast rates managed to increase 1.2%, but Linerlytica says “the gains are already being mitigated”.